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Brits underestimate their worth when taking out contents insurance

26 June 2008 / by Daniela Gieseler

It is not young professionals, but people in their mid-40s who have accumulated the most value of personal possessions in their homes, a new Lifesworth report published by More Than reveals.

To be exact, 46 is the magic age at which people have scooped up the most value in their homes, with £40,919 worth of furniture, designer clothes and luxuries.

The report analyses how much people's possessions are worth at various stages of their life, and traces how individual values increase and decrease as they grow older or experience a change in circumstances.

Worryingly, it also highlighted that more than half of all Britons (56 per cent) completely underestimated how valuable their possessions actually are. When asked, the average 40-year-old said they believed the value of their possessions was around £29,000 – in fact, it is £11,000 more.

One fifth admitted they had never thought about the value of the possessions in their homes, and more than half think the current level of their home contents insurance will be adequate cover for the rest of their lives.

For the under-40s, the care-free, often still independent 28-year-olds without serious commitments achieved the highest values with £33,166, including numerous expensive treats for themselves.

The report also shows how major life events such as moving in with a partner or having children can affect the overall value of home contents. Moving in together will entail an average increase of 65 per cent, while having a baby will add another £2,000 worth of possessions to your home.

More Than product director, Dowshan Humzah, said: "What's concerning is how little thought people seem to be giving to the total value of their possessions. Brits work hard enough to buy things but by not keeping track of what they own, they run the risk of being under-insured.

"The report shows that on average, people spend £13,000 every five years on things they keep in their home so home contents policies need to be checked and updated regularly as a result," Mr Humzah concluded.

Another study by Prudential revealed that when people reach retirement, a couple owns on average savings and assets of £269,479, with about half of it tied up in their property and another 35 per cent in cash, stocks and shares.

Yet, only a small minority of 17 per cent proactively manage their finances or use them to boost their retirement income.

"It is surprising to see just how much money the average pensioner has tied up in savings and property," Gary Shaughnessy, managing director of Retail Life & Pensions at Prudential, commented.

"However, it is even more staggering that so few people have sought financial advice for making the most of their money in retirement. The average pensioner could substantially boost their retirement income simply by using their savings and assets in different ways and exploring other options such as equity release to deliver an income."